The Truth About Buying and Selling Your Home

Last year, sales of existing homes rose more than 9 percent—the highest level in 5 years—and new-home construction reached a 4-and-a-half-year high, reports the National Association of Realtors. And so far this year, sales continue to trend up.

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In fact, it’s a good time for both buyers and sellers. Why? For buyers, even though interest rates have started to rise after reaching 40-year lows, they still aren’t likely to change a lot over the next couple of years because banks want to encourage activity, says Drew Scott, one-half of HGTV’s Property Brothers and the upcoming Brother Vs. Brother, which premieres Sunday, July 21, at 10 p.m. ET/PT on HGTV.

And for sellers? Banks are slowly but steadily releasing foreclosure properties onto the market so as not to flood the inventory. “It’s the simple economics of supply and demand,” says Property Brother Jonathan Scott. When the supply goes down, the demand goes up—and that’s good news for sellers.

We asked the Scott brothers for the advice you need to navigate today’s housing market—whether you’re looking to buy, sell, or stay right where you are.

If you’re looking to buy:

1. Spot a dealProperties priced drastically below other comparables in the neighborhood are probably fixer-uppers. The secret: Learn to recognize a home’s potential.

Find out what fully renovated homes in the neighborhood are selling for, and use that as a guide for what your limit on improvements should be.

Then do your research. While structural issues can be dealbreakers, you don’t have to dismiss those houses outright. Instead, find out what it would take to fix them.

Consider bringing in a contractor to provide a free estimate on all the work that needs to be done. And ignore the paint color, flooring, and carpet; cosmetic features are easily changed.

2. Land the best interest rateTake advantage of low interest rates by making sure your credit score is stellar. (You can check yours free at transunion.com.) If yours is on the low side, consider putting off the loan application for at least 3 months while trying to improve it—go to annualcreditreport.com to request a free copy of your credit history, suggests the Federal Trade Commission. Carefully review the report, and dispute any inaccuracies. Then put on your responsible-guy hat: Pay all your bills on time, and keep your credit card balance below 50 percent of the limit.

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3. Master the lowballRemember these two valuable weapons: pen and paper.

“When I go into a place, I make a list of absolutely everything that’s wrong with it,” says Jonathan. “Then I say to the seller, ‘You know, I love the property; you can tell that you maintained it well. But there are some things that need to be done.’”

Follow Jonathan’s lead and use your list to back up your offer so the seller can see where you’re coming from and doesn’t feel like he’s being lowballed.

“If you justify a lowball offer with things that need to be done, then it’s less likely to offend that seller,” says Drew.

Just make sure the fixes are substantial—we’re talking code violations and inoperative appliances, not dirty carpets or cracked walls. Leave no faucet unturned, no electrical outlet unchecked. Seriously, check the outlets and other built-in electric appliances, including the master tub with jets. After all, imagine how annoyed you’d be on move-in day to find out you need an electrician.

And follow up on red flags: “If there are a lot of air fresheners, it may mean the owners are covering up a musty smell, which means mold,” says Jonathan. “A lot of fans and space heaters can mean heating and cooling problems.” Finally, request copies of the owner’s utility bills to see if costs are abnormally high, which can suggest a lack of energy efficiency in the house. If you’re looking to sell:

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1. Focus on the small stuffYou may be tempted to rip out the kitchen and replace it on the cheap to entice potential buyers. Don’t do that.

A poorly done renovation doesn’t add value and only needs to be fixed later, says Jonathan. Instead, focus on little upgrades that can make a big impact.

Other suggestions: Instead of installing new floors, invest in an area rug; and instead of replacing a dated stone wall or fireplace, paint it and create a patina effect. Oh, and clean up the place, would ya? Decluttering—making the space feel clean and organized but not empty—is a basic but incredibly important step that makes your home feel bigger and happier, and buyers will notice.

2. Don’t play your entire handList the house without the appliances included. Yes, it’s unorthodox, but it gives you leverage. If your appliances are new and of good quality, then you can use them as a bargaining chip later.

3. Take emotion out of itYou watched your kids grow there; you shared laughs with your wife over dinner fiascos in the kitchen; you poured blood, sweat, and tears into finishing the basement—but now you need to sell the place, and it’s just not happening. Guess what? It’s not the buyer.

“If your home isn’t selling, it’s because of one of three things: a problem with the neighborhood, a problem with the house, or a problem with the price,” says Drew. “You can control only the latter two.”

Work with an experienced real estate agent and trust in his or her valuation, and concentrate on simple makeovers—such as those suggested above—that will improve the value of the house in the buyer’s mind.

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If you’re looking to stay put:

1. Consider refinancingA couple of years ago, you thought rates couldn’t get any lower. Now you’re kicking yourself for not waiting. Don’t assume that refinancing again wouldn’t be worth it, advise the brothers.

Some banks are even waiving closing costs, although usually that means a slightly higher rate than if you were to pay the upfront fees, says Bob Walters, chief economist at mortgage lender Quicken Loans, as reported in bankrate.com.

If you don’t plan to stay in your home for more than 5 years, then a no-closing-cost mortgage may be worthwhile, according to bankrate.com. But if you’ll be there more than 5 years, you’re probably better off paying the fees upfront. That’s because you typically break even on closing costs in a few years, but a no-closing-cost loan could saddle you with a higher interest rate for the life of the loan. And that could end up costing you more than if you’d paid the closing costs, reports bankrate.com. Ask your lender or mortgage broker to run the numbers.

2. Make these 5 money fixesIt doesn’t take a lot of green to go green, but it can save you quite a bit. Lower your heating bill by caulking up crevices around the house, increasing insulation in the attic, and replacing the thermostat with a digital one, say the Scott brothers. Also, replace old appliances with new, energy-efficient ones, and install lower-flow faucets in the showers and sinks. And save your receipts: Some energy-efficient improvements may be eligible for a tax credit. (Visit energystar.gov for more info.)

3. Build the man cave you always wantedThe kitchen and bathroom have long been touted as the big-money rooms. Makes sense: They’re the rooms with the coolest features—the fancy appliances, the stylish fixtures.

Create your dream room and you may see a good return on your investment later. Just remember to keep big-ticket renovations neutral but not boring—the bolder you go, the faster it will go out of style, say the brothers. Punch up the look with cosmetic touches, like paint, décor, and furniture.

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